Annual FLA Report on Foreign Assets and Liabilities under FEMA


With the rise in foreign investments, whether through Foreign Direct Investment (FDI) or Overseas Direct Investment (ODI), it has become crucial for businesses to comply with the regulations outlined in the Foreign Exchange Management Act, 1999 (FEMA 1999). One such compliance requirement is the filing of the FLA Return. This return must be submitted by entities that have received FDI and/or ODI in any previous year, including the current year, and is an essential part of their business operations.

Annual Return on Foreign Liabilities and Assets (FLA Return)

Any organization that has received investment from foreign sources such as Foreign Direct Investment (FDI) and/or Overseas Direct Investment (ODI) in the present or any previous year must file an Annual Return on Foreign Liabilities and Assets (FLA Return). This requirement is stipulated by the Foreign Exchange Management Act, 1999 (FEMA 1999) Regulations and was officially communicated through A.P. (DIR Series) Circular No. 45 on March 15, 2011.

Which companies must submit the FLA Return

Any organization that has foreign assets or liabilities in their financial statements and has received investment from foreign sources such as Foreign Direct Investment (FDI) and/or Overseas Direct Investment (ODI) in the present or any previous year must file the FLA Return.

  1. A Company as defined in Section 1(4) of the Companies Act, 2013
  2. A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008
  3. Others, including:
    • SEBI registered Alternative Investment Funds (AIFs)
    • Partnership Firms
    • Public Private Partnerships (PPP)

Which companies are not required to file the FLA Return

  • Some entities are exempt from filing the FLA Return.
  • Entities that have not made any FDI or ODI in the previous years or the current year are exempted from filing the FLA Return.
  • Entities that have only received share application money and have no outstanding balance of FDI or ODI at the end of the financial year are exempt from filing the FLA Return.
  • Entities that have issued shares on a non-repatriable basis to non-residents of India are also exempt from filing the FLA Return.

What is the FLA Return filing deadline

The FLA Return under FEMA 1999 must be submitted by July 15 of each year based on the entity’s audited or unaudited accounts.

Is it possible to file the FLA Return using unaudited or provisional accounts? When the accounts of entities are audited, may the FLA Return be revised?

In case an organization does not have their audited balance sheet prepared, they may still submit the FLA Return with provisional or unaudited figures. However, once the audited numbers become available, the entity must file a revised FLA Return based on audited accounts before the end of September.

If there were no FDI/ODI in the current year, would it still be required to file a FLA Return?

An organization that did not receive any new Foreign Direct Investment (FDI) or Overseas Direct Investment (ODI) in the current year but had existing FDI and/or ODI as of March 31st of that financial year must report their outstanding investment position in the FLA Return every year by July 15th. However, if the Indian entity does not have any investments related to FDI and/or ODI as of the end of March in the reporting year, they are not obliged to file the FLA return.

What will happen if we don’t submit the aforementioned FLA Return by July 15 since our accounts haven’t been audited yet and we don’t want to submit it using unaudited numbers? Will RBI or FEMA impose any penalties or bring any legal action against the entity?
  • Failure to submit the FLA Return by the due date (July 15th of each year) is considered a violation of the Foreign Exchange Management Act (FEMA), and may result in penalties being imposed.
  • The entity responsible for submitting the FLA Return may be required to pay a Late Submission Fee (LSF) of INR 7500, as determined by the Reserve Bank in consultation with the Central Government, for any delays in reporting.
  • According to FEMA 1999, if a person responsible for submitting any filings under the provisions of FEMA does not make such filings within the specified time or fails to make them with the LSF, they may face legal action.
  • This information is based on Notification No. FEMA. 395/2019-RB dated October 17, 2019 and A.P. (DIR Series) Circular No.16 dated September 30, 2022.

What is the consequence of failing to file a FLA return?

As mentioned previously, if an individual responsible for submitting or filing any documents under the Foreign Exchange Management Act (FEMA) fails to do so within the given timeline or neglects to pay the Late Submission Fee (LSF), they may be subjected to legal action under the FEMA, 1999 provisions.

Particulars Penalty Amount
Where the Quantum is can be seen Three times the amount involved in the contravention
Where the Quantum is not identifiable INR 2,00,000
Continuing Contravention INR 5,000 per day

What information must be included in the FLA Return?

  • Part I – Identification Particulars: In this part, the entity is required to provide its identification details.
  • Part II – Financial Details: This part requires the entity to furnish the financial details of the company for the financial year for which the FLA Return is being filed.
  • Part III – Foreign Liabilities: This part of the return requires the entity to disclose its foreign liabilities outstanding as of the financial year-end. These liabilities may include foreign direct investments, portfolio investments, and other related items.
  • Part IV – Foreign Assets: In this part, the entity is required to disclose the foreign assets it holds as of the financial year-end. These assets may include overseas investments made outside India.
  • Part V – Variation Report: This section is typically auto-filled as it reconciles the data from the previous four sections.

Is it necessary for an entity to file the FLA Return if it has simply received share application funds?

If a company has solely received share application money and does not have any pending foreign direct investment (FDI) or overseas direct investment (ODI) by the end of the reporting year, it is not required to file the FLA Return.

Is it necessary to provide any financial statements with the FLA Return, such as a balance sheet or P&L accounts (audited or unaudited)?

There is no requirement to submit Balance Sheet or Profit/Loss accounts. The only mandatory submission is the FLA Return, which should be made through the online web-based reporting portal before the due date.

Which nation—the country of the ultimate holding company or the country of the immediate investor—should be used to disclose FDI in the FLA Return? Where should we record the payables and receivables for the ultimate holding company that is not a resident?

While filling out the FLA Return, the reporting of Foreign Direct Investment (FDI) must be based on the country of the immediate investor. However, if there are any outstanding receivables/payables with the non-resident ultimate holding company, they must also be disclosed under the “Other capital” section (2.b DI) of Section III.

If a firm’s non-resident shareholders transfer their shares to residents during the reporting period, is the corporation still required to file the FLA Return?

If during the reporting period, all non-resident shareholders of a company have transferred their shares to residents and the company has no outstanding investments related to Foreign Direct Investment (FDI) or Overseas Direct Investment (ODI) by the end of March in the reporting year, the filing of the FLA Return is not required.

Process for filing FLA Returns for an Alternative Investment Fund (AIF)

For an Alternative Investment Fund (AIF) to submit the FLA Return, they must first register on the FLAIR portal. However, the portal does not offer an online option for filing the FLA Return for AIF in the required format. Therefore, after completing the registration process, AIFs must send an email to [email protected] to request the form for filing the FLA Return. Subsequently, the FLA Team will send the excel form to the AIFs via email. AIFs must complete the excel form and return it to [email protected]. Once the filled-in FLA Return is received, the FLA Team will send an acknowledgment via email to the AIFs.

If You have any query then connect with us at [email protected] or you can contact us  & stay updated with our latest blogs & articles.


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